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Hurricane Discounts: Insurers Giveth and They Taketh Away (cont.)

Thu Oct 7th, 2010 on     Homeowners Insurance,    

In our last post, we talked about the law changes affecting insurance discounts for hurricane-proofed homes throughout Florida. Initially, following the devastating 2005 hurricane season, the Legislature required double discounts for hurricane mitigation efforts in order to minimize both the damage to homes and the claims cost to insurance companies. The rationale for many of this year’s laws was to protect customers and their insurers from financial harm as well as to protect the health and safety of customers. Critics and homeowners are wondering if in practice the emphasis was more on insurers than on customers.

When an inspector verifies that a home improvement meets the guidelines, that verification is good for five years. Under the new laws, an insurer may, at its own cost, send an inspector out to determine the accuracy and veracity of the initial inspector’s findings. The question is, what happens if the insurance company inspector finds the property does not qualify?

According to a Delray resident, it’s not pretty. His home inspection report in 2009 showed significant hurricane-proofing measures — shutters, steel-reinforced garage and front doors — and his insurer discounted his premium by 33 percent. When he renewed, his premium went up slightly. But eight months later, his insurer informed him they had reviewed the report, rejected some of the improvements and recalculated his rate. His premium increased 69 percent — retroactively.

The homeowner changed insurance companies but is still arguing over a refund of his premium. The company insists he still owes the retroactive payments.

A Davie homeowner was receiving a discount based on some significant home improvements made in the past few years. This year, her premium increased by about 55 percent. She switched companies and got a lower premium — but she also cut her coverage by $30,000.

These are not isolated cases. The state’s largest home insurer (not the original insurer in either example above) began re-inspecting homes last year. The company grants $700 million in discounts annually and, according to a representative, is working to document all construction features thoroughly and accurately to protect their investment.

Some state officials and consumer advocates are concerned that actions like these will discourage homeowners from making improvements at all. Others are calling for state regulators to investigate allegations of insurers reversing discounts arbitrarily or based on the biased findings of their own inspectors.

It’s a “money-grab,” said one homeowner. “It’s inevitable that insurance companies will go out of their way to deny credits.”

Resource: “Home Insurers Revoking Discounts for Hurricane-proofing” 10/1/10

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